Kathryn Ma Wai Fong (as the personal representative, executrix and trustee, and in her personal capacity as a beneficiary of the estate of the late Wong Kie Nai) v Wong Kie Yik

• Jurisdiction: British Virgin Islands
• Judge: Webster JA
• Judgment Date: 27 March 2019
• Judgment citation (vLex): [2019] ECSC J0327-3
• Court: Court of Appeal (British Virgin Islands)
• Docket Number: BVIHCMAP2018/0001 and BVIHCMAP2018/0002
• Date: 27 March 2019

[2019] ECSC J0327-3

EASTERN CARIBBEAN SUPREME COURT

IN THE COURT OF APPEAL

Before:

The Hon. Mr. Paul Webster Justice of Appeal [Ag.]

The Hon. Mr. Rolston Nelson, SC Justice of Appeal [Ag.]

The Hon. Mr. Douglas Mendes, SC Justice of Appeal [Ag.]

BVIHCMAP2018/0001 and BVIHCMAP2018/0002

In the Matter of Successful Trend Investments Corporation

In the Matter of Section 1841 of the BVI Business Companies Act 2004

Between:

Kathryn Ma Wai Fong (as the personal representative, executrix and trustee, and in her personal capacity as a beneficiary of the estate of the late Wong Kie Nai)

Appellant

and

[1] Wong Kie Yik

[2] Wong Kie Chie

[3] Successful Trend Nvestments Corporation

Respondents

Appearances:

Mr. Jonathan Crow, Q.C. with him, Mr. Herman Boeddinghaus and Mr. James Noble for the Appellant

Mr. David Alexander, Q.C. with him, Mr. Simon Hall for the 1 ^st and 2 ^nd Respondents

Mr. Oliver Clifton for the 3 ^rd Respondent

Commercial appeal — Conversion of non-voting convertible preference shares held by 3rd respondent company in Malaysian company — Validity of conversion — Appellant reduced to minority shareholder in Malaysian company — Whether conduct of 1st and 2nd respondents effecting conversion oppressive, unfairly discriminatory and/or unfairly prejudicial to appellant — Relief sought under section 181I of BVI Business Companies Act 2004 — Purpose of conversion — Whether conversion effected for commercial reasons or to affect balance of power in Malaysian company — Fiduciary duties of directors — Section 59 of Malaysia Companies Act — Appointment of liquidator under section 159(1) of BVI Insolvency Act 2003 on just and equitable ground

Application to amend claim to include independent claims for appointment of a liquidator under section 162 of Insolvency Act on the just and equitable ground, and for breaches of sections 121 and 175 of the BVI Business Companies Act — Whether amendment purely cosmetic — Whether judge erred in refusing late amendment

Application to adduce fresh evidence — Whether appellant satisfies Ladd v Marshall requirements — Whether evidence if admitted would have had an important influence on trial

Appeal against findings of fact — Credibility — Approach of appellate court in reviewing such findings

The late Wong Tuong Kwang (“WTK”) was a successful businessman who created a valuable business empire mainly in Malaysia known as the WTK Group. He had three sons — the 1 ^st respondent, Wong Kie Yik (“WKY”) and the 2 ^nd respondent Wong Kei Chie (“WKC”), who are the respondents to this appeal (“the Respondents”), and the late Wong Kie Nai (“WKN”) who died in 2013. WKN's widow, Kathryn Ma Wai Fong (“the Appellant” or “Ms. Ma”), is the appellant. The 3 ^rd respondent, Successful Trend Investments Corporation (“STIC”) is a British Virgin Islands (“BVI”) company over which the Respondents have de facto control. STIC was acquired “off the shelf” for the sole purpose of holding convertible preference shares issued to it by a Malaysian company, WTK Realty Sdn Bhd (“Realty”). Realty is the primary company in the WTK Group.

On 1 ^st July 2004, STIC resolved to enter into a subscription agreement by which it agreed to subscribe for 55 million non-voting convertible preference shares (“CPS”) in Realty with a par value of RM0.01 per share. The subscription price for the CPS was RM1 per share made up of the RM .01 par value and a premium of RM0.99 per share, resulting in a total subscription price of RM 55 million. The holder of the CPS was entitled to convert the shares to ordinary voting shares in Realty at a conversion ratio of 20 convertible shares to 1 ordinary share. STIC paid the par value of RM550,000 for the CPS and on 30 ^th August 2004, the CPS were duly issued to STIC. It is disputed whether STIC paid the subscription price of RM550,000. The ordinary shares have a par value of RM1 each.

On 25 ^th March 2013, STIC resolved to elect to convert the 55 million CPS to 2,750,000 ordinary shares in Realty and to give notice of its election to Realty (“the Conversion”). The Conversion was completed on 8 ^th April 2013 when STIC paid the balance of the subscription price to Realty, having received credit of the RM550,000 paid for the CPS in 2004. Realty issued a share certificate to STIC for the 2,750,000 ordinary shares which represented 14.4% of the voting shares in Realty. The effect of the Conversion was that it diluted the shareholding of all the ordinary shareholders in Realty. By virtue of the combination of their control of STIC and their own shares in Realty, the Respondents gained effective voting control of Realty and reduced the Appellant and her family, to minority voting shareholders in the company. It is the Conversion and the resulting loss of voting control of Realty to the Respondents that are at the heart of the disputes between the parties.

The Appellant applied to the Court on 4 ^th May 2015 for relief under section 181I of the BVI Business Companies Act (“the BC Act”) on the basis that the affairs of STIC are being or have been conducted by the Respondents in a manner that is oppressive, unfairly discriminatory and/or unfairly prejudicial to her. She sought orders including the setting aside of the Conversion on various grounds, and/or a buy-out of her shares in STIC, and/or the appointment of a liquidator of STIC under section 159(1) and 162 of the Insolvency Act on the just and equitable ground.

The matter came before the learned trial judge (“the Judge” who, having heard all the evidence, granted a short adjournment of the trial to allow counsel for the parties to file written closing submissions prior to making their oral closing arguments. The day before the scheduled resumption of the trial and two days after the filing of the submissions, the Appellant's legal representatives served a draft application on the legal representatives for the Respondents, and the representatives for STIC, for an amendment of her claim to include alternative, independent claims for the appointment of a liquidator of STIC under section 159(1) and 162 of the Insolvency Act on the just and equitable ground, and for breaches of sections 121 and 175 of the BC Act. Prior to that, the Appellant's claim was made pursuant to section 184I of the BC Act. A formal application for the amendment was filed while oral closing submissions were being made.

The Judge refused the amendment application, dismissed the claim and ordered a buy-out of the Appellant's shares in STIC by the Respondents. The Appellant, being dissatisfied with the Judge's decisions, appealed. Subsequent to the hearing of the appeals, she applied to adduce fresh evidence in the form of a bank statement from HSBC Bank for Lismore Trading Limited (“the Lismore Statement”). This evidence, the Appellant said, would have an important influence on the result of the appeal.

The main appeal concerns the validity of the Conversion (“the Main Appeal”). This is primarily an appeal against the Judge's findings of fact. The Appellant's position is that the conversion of the CPS contravened section 121 of the BC Act in that it was for the improper purpose of changing the voting power in Realty. Ipso facto it was unfairly prejudicial to her as a shareholder thereby entitling her to relief under section 184I. Alternatively, if the Conversion was for a proper purpose it was nonetheless unfairly prejudicial to her because it resulted in the loss of majority control of Realty. In attempting to prove her unfair treatment, the Appellant relied on a shareholders agreement and a family agreement regarding the Conversion and submitted that those agreements were breached in that the CPS were converted without the unanimous consent of the three brothers. The Appellant also submitted that the Conversion should be set aside because it breached section 175 of the BC Act dealing with the disposition of more than 50% of a company's assets, as well as section 59 of the Companies Act of Malaysia 1965 (“the MCA”) dealing with issuing shares at a discount.

The Court therefore had to determine the application to adduce fresh evidence (“the Fresh Evidence Application”), the appeal against the refusal of the amendment application (“the Amendment Appeal”), and the Main Appeal.

Held: dismissing the Fresh Evidence Application, the Amendment Appeal and the Main Appeal; affirming the orders made by the Judge; awarding costs of the Fresh Evidence Application to the Respondents to be assessed, if not agreed, within 21 days of the date of this order and costs of both appeals to the Respondents and STIC of two-thirds of the costs assessed in the lower court, that:

• 1. The Lismore Statement satisfies the first and third limbs of the Ladd v Marshall test because it could not have been obtained with reasonable diligence for use at the trial and it is presumably to be believed. The onus was on the Appellant to demonstrate that, if admitted, the Lismore Statement would have an important influence on the result, though it need not be decisive. The three reasons advanced by Ms. Ma for submitting that the Lismore Statement is important do not demonstrate that the statement would have an important influence on the result of the trial and the application is therefore dismissed.

  Ladd v Marshall [1954] 1 WLR 1489 applied.

• 2. On an application under the BVI Insolvency Act on the just and equitable ground, once a member of a company satisfies the Court that it is just and equitable to appoint a liquidator for any of the reasons recognised by the decided cases, he can ask the Court to make an order appointing a liquidator. On the other hand, a member applying under section 184I of the BC Act for the appointment of a liquidator must satisfy the Court that he is or has been unfairly prejudiced or discriminated against to get relief, and that it is just and equitable to wind up the company. In this case, the Appellant is seeking to move from having to prove...